Why an EV fleet now makes financial sense

Businesses across multiple industries are embracing electrification as a business strategy choice because the total cost of ownership (TCO) of an EV fleet is now cheaper than an ICE fleet.

This has been seen across multiple fleets both small and large, in the public and private sectors, with industry led evidence from recent research highlighting this trend.

A survey of over 300+ senior decision-makers who are responsible for the electrification of 100+ vehicle-sized fleets across the UK and US, has found that 43% anticipate reduced TCO as a result of their transition to electric.

This should be widely welcomed as a major milestone towards achieving global net zero goals, particularly given the recent forecast issued by the Climate Change Committee.

Additionally, the majority (84%) of these organisations have already introduced a net-zero transportation initiative, with the remainder planning to do so in the coming years.

The reasons for doing so are multi-layered, but over half (54%) point to cost savings and long-term financial benefits as the primary driver.

This outweighs other factors, including meeting corporate sustainability or ESG goals (51%) and enhancing brand reputation and market differentiation (44%).

What this shows is that electrification is no longer something niche. It is rapidly developing into a driver for financial improvement.

The primary reason for this shift is that companies have seen electrification provide measurable gains as part of a journey to increased and longer-term efficiency, a safeguard amidst the backdrop of volatile operating costs, and a route to increasing competitivity.

Interestingly however, this stance is primarily being driven by public sector organisations as things stand.

In fact, according to recent research, public sector organisations are more than twice as likely to have a fully implemented net-zero transportation initiative than those in the private sector.

This is most likely due to the increased scrutiny that organisations in the public sector face when it comes to regulatory requirements and Government mandates, as well as the fact that they often have better access to grants and subsidies.

The main motivations for implementing a net-zero transportation initiative also differ between the public and private sectors.

In general, public sector organisations cite brand reputation and market differentiation (53%) as the primary driver, while private sector companies focus more on cost savings and long-term financial benefits (53%).

However, while 43% of businesses anticipate reduced TCO as a result of their transition to electric, there are still challenges.

One way in which fleets are increasingly looking to tackle these challenges is to explore business models that enable them to offset the initial upfront CapEx.

Charging-as-a-Service (CaaS) is one such route that many organisations are turning to for example.

Indeed, the same recent survey identified that over half (51%) of organisations are looking at CaaS models as a way to plan/finance their EV charging infrastructure.

This number rises to almost two-thirds (64%) among those enterprises that have already started to electrify their fleets as they look for ways to optimise costs as they expand.

The primary reason these models are becoming widely embraced is that because they enable the shifting of infrastructure from a capital expense to a managed service, upfront investment is reduced and running costs are more predictable.

Additionally, CaaS gives organisations with the confidence to scale electrification without the restriction of being held back by infrastructure ownership.

Apart from CaaS, there are many other options for companies looking to plan/finance their EV charging infrastructure and offset the initial upfront CapEx.

Respondents to the industry survey pointed to third-party ownership or lease models, for example, depot sharing hubs, as the next most popular route behind CaaS (45%), closely followed by Government grants or subsidies (44%).

If the past few years have been about trials, learning, experimentation and gradual progress, momentum has well and truly shifted to where we are today.

Electrification is no longer an environmental commitment or requirement; it is a strategic business decision and priority.

What is evident is that for many, electrification now makes clear financial sense.

Richard Earl is R&D director at EO Charging